Gold, Silver slip, Cotton soars

Commodities displayed a mixed trend in the absence of any major triggers during the week. The US President's $447-billion jobs plan to stimulate growth and combat unemployment received a positive response from the market. The price of crude oil moved higher as did most base metals. Gold and silver, however, moved lower in response.

Over the next few trading sessions, commodities are expected to remain in range as investors wait for signs of the economic health in the US and Europe. From the agri pack, wheat and corn prices moved sharply lower after food minister KV Thomas announced India has removed earlier restrictions for export of the grains.

Cotton prices rose to a two-month high this week on the back of adverse weather conditions in the US and Pakistan — the major producers of the fibre. This came close on the heels of a bullish statement made by the International Cotton Advisory Committee that global cotton imports will increase to 8.1 million metric tonnes in the year that started August 1 as China increases its state reserves of cotton.

However, this can only be considered as a temporary blip in the secular bearish price trend of the commodity. Rabobank International in its report has estimated that global cotton output will reach 120 million bales in the 2011-2012 season.